I don't mean the location document in the notes client, I mean the person record in the directory. Do you have a home sametime server set there,.
As for the error 0x80000239 that is not a Sametime error I can see documented, and I cannot find it anywhere either.
If you install a sametime client on the sametime server, can it login ?
Are you running any antivirus software on the server?
If you open up the Sametime.log on the sametime server, do any errors jump out? (Ignore the one about antivirus not running)
Your ND7 client might not me autorhized to connect as it is an old version, so you have to modify the sametime.ini to allow it.
You can try our free login tester tool to see if the issue is client version and VPS_ALLOWED_LOGIN_TYPES
in your sametime.ini